MWIDE: BUY RECOMMENDATION

PSE finally broke the 4250 resistance. It's good news for all of us. Foreign investors has been buying our stocks pouring their dollars into our economy. No doubt, the peso is getting stronger nowadays. Just today alone, foreign investors bought 470 million pesos worth of shares. Now, imagine that with the 1st week of April when the bull market started, billions of pesos worth of shares were bought by foreigners already. That has a big impact on our economy and peso-dollar exchange. Most of the shares are going up.

Today, I checked Megawide Construction (MWIDE) shares and was astonished at the number of shares bought. The volume suddenly increased exactly at 11 am today with more than 5 million shares being bought. Since the average shares being bought everyday is 200k shares, todays transaction is unusual. BUYERS are flocking! 80% of those shares were bought by Citiseconline and UBS. 

MWIDE was incorporated in the Year 2004 with Mr. Micheal Cosiquien and Mr. Edgar Saavedra as the major stockholders.  (These names aren't familiar to me, perhaps I will start recognizing them).73% of the revenues of MWIDE came from SM MALLS, SM housing projects and other SM projects. Since most of SM Malls were being constructed by MWIDE, Henry Sy bought 20% of MWIDE stocks when it went public last February 2011 . MWIDE has already become a byword in the real property sector since its inception in the stock market.

The outlook for the property sector is bright because of the strong economy, growing OFW remittances and skyrocketing tourism. The ties of MWIDE with Henry Sy will ensure billions worth of revenues in the coming years because SM Malls are sprouting like mushrooms everywhere. Also since MWIDE uses high technology in construction (it is the first company actually to extensively use advance technology), it has a big advantage right now compared to Ayala Land and Megaworld. It is also setting up a billion pesos precast manufacturing complex that will increase its production and lead time.

Unless SM runs out of space to build SM malls which may happen after a decade or so, the company's earnings will compete with that of ALI and Megaworld. By the time SM Malls become saturated in the market, you already have a great return on your investment with MWIDE. MWIDE is also planning to remove their dependency on SM and will go with other construction projects like hotels, housing and high-rise buildings. Given with their competitive advantage in utilization of modern technology in constructing buildings coupled with their pre-cast manufacturing complex, it will not be long before it will be held at the level of Ayala Land and Megaworld.

The prospects are good in the coming years but we need to see how it will play out once SM projects are all completed. That will be the time whether MWIDE can stand on its own.